Taiwan's electricity market has long been monopolized by the state-owned Taiwan Power Company (Taipower), including generation, sales, transmission, and distribution. In 2017, Taiwan made significant amendments to the Electricity Act, opening up competition in generation, sales, and other electricity services to private enterprises. However, with the government's commitment to procuring renewable energy at a fixed Feed-in Tariff (FIT) rate for twenty years, Taipower becomes the major buyer of renewable energy, leaving only few accessible to companies. It was not until after 2020, when the FIT rate declined and companies were willing to purchase renewable energy at a higher price, that the green energy trading market in Taiwan was formed.
Currently, Taiwan's green energy market has become increasingly developed, with the highest volume of Power Purchase Agreements (PPAs) signed in Asia. However, compared to other Southeast Asian countries, the rules of Taiwan's green energy market are more complex. This article will provide readers with a deeper understanding of the current situation and challenges of Taiwan's green energy market.
Green electricity supply in Taiwan
Despite the amendments to the Electricity Act, more than 30% of the overall renewable energy generation comes from Taipower's own sites, with conventional hydroelectricity accounting for the majority. Moreover, since Taiwan's renewable energy generators used to contract with Taipower, the proportion of those entering the FIT system remained high over the past five years. In May 2020, Taiwan completed its first green power wheeling, with a total volume of over 110 million kWh, marking the first year of green power trading in Taiwan.
To date, Taiwan's green energy market has experienced a persistent supply shortage, resulting in high prices and have attracted more and more renewable energy generators to the market. Even those have signed FIT contracts with Taipower started to cancel their contracts to switch to the green electricity market. Such trend is reflected in the year-on-year growth in green power supply, which in 2022 increased by 33.6% over the previous year, reaching nearly 1.32 billion kWh.
Figure 1. Taiwan's green electricity supply structure (2018-2022)
Source: Energy Statistics Information System (Bureau of Energy), Taipower information disclosure
Green energy demand in Taiwan
Renewable energy buyers in Taiwan are facing pressure from three sources: policy, supply chain management, and the company itself. The policy-driven pressure comes from the Regulations Governing the Chartered Capacity on Electricity Consumption Agreements Which the Users Shall Install Renewable Energy Facilities for Exceeding a Certain Capacity (一定契約容量以上之電力用戶應設置再生能源發電設備管理辦法), also known as the “major electricity consumer clause (用電大戶條款),” which requires companies to achieve a 10% renewable energy use by 2025. On the other hand, demand for renewable energy is most urgent for companies with supply chain management requirements, particularly in the precision sector such as semiconductors. Demand pressure from the company itself mainly comes from the financial sector and large service chains.
Taiwan's green energy trading model
There are currently three ways to obtain renewable energy in Taiwan: signing a Corporate Power Purchase Agreement (CPPA), self-consumption, and purchasing a Renewable Energy Certificate (T-REC).
Figure 2. Green energy acquisition patterns in Taiwan (2022)
Source: National Renewable Energy Certification Center
In 2022, 81% of Taiwan's green energy was obtained through CPPAs, which is by far the largest trading method. Buyers can enter into CPPAs directly with Type 1 renewable energy power plants or renewable energy generators at prices and contract lengths set by both parties, with no price caps and floors. Upon direct power supply, the bundled T-REC will also be transferred to the buyer's account, which cannot be resold as only one transfer of the certificate is allowed.
Figure 3. Trading process through CPPA in Taiwan
Green electricity users can build their own renewable energy systems, such as rooftop or ground-mounted solar, with no capacity limits. When green electricity passes through the user's meter, the National Renewable Energy Certification Center will automatically generate T-RECs to their account.
Purchasing unbundled T-RECs
Some companies with self-consumption do not need T-RECs that are generated and therefore can resell them to other users, as the certificate can be transferred once under the rule. The National Renewable Energy Certification Center has established a T-REC bidding platform where purchases can be made, although private negotiation and trading are more common. It is worth noting that major electricity consumers are not allowed to acquire renewable energy in this way.
Table 1. Comparison of Taiwan’s green energy trading methods
Note: Taiwan's Type-3-to-1 trend
Taiwan's power plants are categorized into Type 1, Type 2 and Type 3. The differences lie in the capacity and purpose of the power plants. Type 1 power plants are the only type allowed to sell electricity, and thus requirements on their fire protection are more stringent than those of Type 2 and Type 3 plants. Type 2 and Type 3 power plants were initially defined as self-consumption plants, but with the recent demand surge that drives up prices in Taiwan, some owners of Type 3 plants have begun applying to convert their plants to Type 1 for power sales.
Figure 4. Renewable energy purchase channels and process in Taiwan
Renewable energy market trend
Taiwan's renewable energy generation relies on solar, onshore, and offshore wind power, with solar capacity being the majority. Taking the capacity structure in 2022 as an example, 86% of the capacity came from solar power, while onshore and offshore wind accounted for 7% of the total. It is worth noting that the structure of renewable energy is expected to undergo remarkable changes after 2024, with the share of offshore wind power increasing significantly. This is because the wind farms signed in recent years will be connected to the grid from 2024 onwards, which, coupled with the subsequent zonal development of 500 MW per phase, will make offshore wind power an important pillar of Taiwan's future green energy supply.
Figure 5. Installed renewable energy capacity in Taiwan (2021-2030)
Challenges facing Taiwan's green energy market
The trading mechanism in Taiwan's green energy market is much more stringent than in other Asian countries, and the threshold for entry is relatively high, as most transactions are based on the signing of PPAs. Therefore, the lack of access and the high prices caused by insufficient supply are major obstacles for many buyers in Taiwan.
However, as mentioned earlier, there will be a large volume of offshore wind power entering the market in the next three to five years, which will greatly fill the supply gap. Despite this, due to the concentration of wind power generation in winter the substantial capacity of individual wind farms, only a few companies in Taiwan have corresponding demand to accommodate it. Based on the current market mechanism, many small and medium-sized (SMEs) enterprises cannot benefit from offshore wind power and are waiting for the introduction of relevant supporting measures.
Taiwan's green energy market FAQs
Who is the major buyer of green energy in Taiwan?
In 2022, semiconductor manufacturers dominated the top five buyers who signed PPAs, with Taiwan Semiconductor Manufacturing Company (TSMC) taking the lead, accounting for 66.39% of the total purchase volume. Compared to 2020 and 2021, this situation significantly improved, with TSMC's dominance decreasing from over 90% to 66%. This indicates that with the increase in supply, an increasing number of different buyers are participating in Taiwan's green energy market.
Figure 6. Top five green energy buyers through PPAs in Taiwan (2022)
Source: National Renewable Energy Certification Center
What is the difference between bundled and unbundled T-RECs?
All unbundled T-RECs are generated from self-consumption sites, namely these sites have only electricity demand without the need for the RECs, and therefore release the certificates generated to the market. The trading of unbundled T-RECs does not involve any electricity distribution and requires only the trading of the certificates.
Bundled T-RECs, on the other hand, are all generated from renewable energy generation sites, with access from the sites themselves or their entrusted sellers. The purchase of a bundled T-REC requires the signing of a CPPA, as well as the submission of at least one year's electricity bills to the seller for the purpose of evaluating and planning power distribution. Currently, Taiwan's electricity bill is settled on a monthly basis using time-of-use rates, which is also applied to renewable energy.
What is the price of green energy in Taiwan?
The prices of both bundled or unbundled T-RECs are determined by the market and therefore fluctuates. In addition, even though the Taiwanese government has not set a floor price, the price of the T-RECs must be higher than the FIT rates, which provides an incentive for renewable energy generators to switch from the FIT mechanism.
 The FIT is updated annually. Visit the website of Bureau of Energy, Ministry of Economic Affairs for more details on rates in 2022.
 When terminating the renewable energy contract with Taipower, the agreed-upon FiT from the two years prior to the termination will be used as the fixed rate. If the prevailing FiT is higher than the fixed rate, Taipower will agree to terminate the contract without any termination fee; if not, both parties will need to negotiate the conditions for terminating the contract.
 Type 1 power plants refer to facilities that use renewable energy to generate electricity in accordance with the Electricity Act and related regulations.
 The electricity rate is different depending on the peak and off-peak hours, as well as summer months and non-summer months.